IT outsourcing predictions for 2007

Luxoft, one of Russia's leading providers of IT outsourcing development and services to companies like IBM, Dell, Deutsche Bank, T-Mobile and others, has issued its predictions for the IT outsourcing industry in 2007. These trends and predictions cover a range of technical, business and relationship pulse-points and demonstrate the increasing maturity of the global IT outsourcing market. Top areas to watch include:.

* Outsourcing Gets More Agile - In 2006 client interest grew in employing the Agile development methodology in their outsourced environments.

This trend will continue to expand in popularity in 2007.

With the right people, project management and metrics in place this highly collaborative approach, traditionally thought to be only for in-house teams, will continue to speed client solutions to market.

* Hybrid Models Become the Norm - No one approach - in-house, on-site, ODCs or captive models - will rule the day in 2007.

Each company will assess its available global resource and skill pool and choose a variety of outsourcing and in-house combinations to reach its desired business and technical goals.

Outsourcing, whatever model or mix is ultimately chosen, will become as commonplace as Six Sigma.

* Retention Eases Tensions - Clients want stable and vested vendor teams working on their engagements.

In 2007 they will increasingly demand that vendors meet, and preferably exceed, industry retention rates as a requirement of winning and doing business.

* The Security Bar Is Raised - In 2007, all forms of security will be on the shortlist for successful outsourcing engagements - systems, data, physical, staff and disaster recovery.

These elements must be locked down and fully integrated before true security can be achieved and clients will increasingly demand excellence on this front.

* Nearshoring Comes Closer - No matter where companies are headquartered or operating, they will increasingly look to nearshore development solutions to round out their outsourcing portfolios.

In 2007 there will be increasing demand for resources in Europe, Eastern Europe and Canada but this phenomenon will be seen around the globe.

* Value Becomes King Over Cost - With the outsourcing market continuing to mature, tunnel vision around pure cost savings will widen to other success factors such as the ability to deliver complex outsourcing services, relationship quality and measurable ROI.

In 2007 companies will look for outsourcing partners who can provide higher value services; who have mature and proven - yet flexible - engineering, quality, security and business processes; who can forge quick and strong working relationships; who are well trained and bring specific technical and vertical expertise; and who will become vested in their success.

* Fluency of Many Forms Is a Must - It's no longer enough to be fluent in English- and other key business languages - to do outsourcing business globally.

In 2007, fluency in specific technologies, industries, and methodologies will continue to grow in importance as 'must haves' for any serious outsourcing vendor.

* Player Consolidation Continues - With the need for outsourcing providers to ensure scalability of services and support for their clients, consolidation among smaller service providers with similar strengths and expertise will continue in 2007.

Outsourcing companies also will make expansion plans to compete with global leaders, acquire vertical domain expertise and gain access to global resource pools.

Player consolidation will be most visible in the up-and-coming outsourcing markets like China and Russia, with possible buyouts across the regions.

* In 2006 financial and banking companies became larger consumers of IT outsourcing - In 2007, this trend will continue with areas like CRM in demand.

Key factors for vertical success will increasingly include security, risk and financial market diversification, disaster recovery planning and engagement staffing standards.

We will also see more real time areas like on-floor trading technology get in the outsourcing mix.

* Russian IT Outsourcing Sees More Record Growth - Over the past few years Russia has seen explosive growth in its IT outsourcing business - now a $1B+ market.

With its strong technical performance and heritage, well-educated developer and business workforce, proven Western business practices, and increasing Eastern European connection, Russia is poised for another year of stellar growth and value add to clients.